Friday, July 01, 2016

No Cottonseed Loans But Another Cotton Program

AEI has a post criticizing the new cotton program, taking a cynical view of the motivations, as one might expect of them. It reminds me I never posted on the program.

What's the new cotton program?  It's a "one-time" cost-share program to assist in ginning cotton.

You ask: is ginning cotton a new requirement?  I thought cotton had been ginned for a few years.  I even read about Eli Whitney inventing the saw gin in 1797 and how that impacted history. If cotton ginning isn't new, why do cotton producers suddenly need cost-share assistance?

I suggest googling "cottonseed" in this blog--you'll find 3 posts back at the beginning of the year on the issue of adding cottonseed as an oilseed.  The issue then was whether Secretary Vilsack had the authority to do as the cotton producers asked.  He was saying no back in February.  I cynically said lawyers would find a way.  Apparently they didn't find a way to add it as an oilseed; perhaps the years and decades of history was too much. 

But they did find a way to authorize a $300 million program, which was announced mid June.  How?  Damned if I know.  I did a quick check for a Federal Register document, and found a notice, not a rulemaking.  The notice says: "The Commodity Credit Corporation Charter Act (15 U.S.C. 714c(e)) includes authority for CCC to use its general powers to increase the domestic consumption of agricultural commodities (other than tobacco) by expanding or aiding in the expansion of domestic markets or by developing or aiding in the development of new and additional markets, marketing facilities, and uses for such commodities."  It goes on to argue the need for the program.

So, I rest my case, my cynical case: put enough pressure on the lawyers and they'll come up with something which sounds halfway reasonable.  As a retired bureaucrat, I can only applaud their chutzpah.  It's not PIK, but it's on that scale.  (Have I written about PIK--someday I must.)

Now if there were anyone really opposed to the program, they might find a favorable Texas district judge to slap an injunction on USDA for not following the Administrative Procedure Act, like the conservatives did on Obama's immigration (actually Jeh Johnson's) measure.  But there's no one opposed to doling out money, not like there is on immigration.  So no court case, only the Brazilians, whose victory over our cotton subsidies is probably ultimately responsible for the new program, might have problems with it.  And since it's one-time, they may not challenge it under WTO.

Given the decimation of Southern Democrats, I'm wondering the political motive for this action.  In the past you could account for favoring cotton because there were people like Sen. Lincoln, or Pryor still in Congress, but now not.  Was there a backroom deal, maybe to get Sen. Cotton to lay off on an appointee?  (I'm sure Sen. Cotton will be happy about this program. :-)

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